Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO
AbstractThe present paper describes the modelling approach of regional labour markets taken in the newly developed dynamic spatial general equilibrium model RHOMOLO, where the labour market equilibrium is determined by ?rms’ labour demand, a wage-curve with unemployment, and inter-regional labour migration. The RHOMOLO model is parameterised by estimating the key structural parameters econometrically. In order to illustrate the potential of the proposed dynamic spatial general equilibrium approach to inter-regionally integrated labour markets, we carry out simulations showing the e?ects of a reduction in ransportation cost, and assess the impact on regional labour markets. Our results con?rm that wages and unemployment are by far the most important channels of adjustment to macro-economic and policy shocks in the EU. In contrast, labour migration plays a secondary role in labour market adjustments in the EU. Our results also suggest that the relationship between market access, labour demand and labour supply is non-linear and spatially inter-dependent, which underlines the importance of the proposed dynamic spatial general equilibrium approach.
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Bibliographic InfoPaper provided by Institute for Prospective and Technological Studies, Joint Research Centre in its series JRC-IPTS Working Papers with number JRC80825.
Length: 29 pages
Date of creation: Mar 2013
Date of revision:
Dynamic spatial general equilibrium model; labour; migration; unemployment; wage; RHOMOLO; DSGE; new economic geography.;
Other versions of this item:
- Andries Brandsma & d'Artis Kancs & Damiaan Persyn, 2013. "Modelling Migration and Regional Labour Markets: An Application of the New Economic Geography Model RHOMOLO," Vives discussion paper series 36, Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
- NEP-EUR-2013-05-22 (Microeconomic European Issues)
- NEP-GEO-2013-05-22 (Economic Geography)
- NEP-LAB-2013-05-22 (Labour Economics)
- NEP-MIG-2013-05-22 (Economics of Human Migration)
- NEP-URE-2013-05-22 (Urban & Real Estate Economics)
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